14 May 1996 Internal T.I. 9612117 - MUTUAL FUND LIMITED PARTNERSHIP UNITS RRSP

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

transfers of mutual fund limited partnership units to rrsp

Position:

routine explanation of law

Reasons:

routine

			May 14, 1996

	Ottawa TSO	Headquarters
	Business Audit Section			Wayne Harding
(613) 957-8953
	Attention: Ken Staple
			7-961211

Transfer of Mutual Fund Limited Partnerships into RRSPs

This is in reply to your memorandum of April 2, 1996, wherein you requested our comments on two questions posed to you by a person considering the transfer of mutual fund limited partnership units to an RRSP. In reply to those questions we offer the following comments.

1.Mutual fund limited partnership units are qualified investments for an RRSP if they are listed on a stock exchange referred to in section 3200 of the Income Tax Regulations (the "Regulations"). Accordingly a person may transfer units of mutual fund limited partnerships listed on the Alberta, Montreal, Toronto, Vancouver and Winnipeg Stock Exchanges to an RRSP.

2.Transfers of property between an annuitant of an RRSP and the RRSP are non-arm's length transactions. Therefore, a person must transfer units of a mutual fund limited partnership at the fair market value of the units at the time of the transfer. The fair market value of the units is a question of fact. However, we would generally expect their value to be the same as the value the units were trading for on an exchange at the time of transfer.

You may also wish to advise your correspondent that the transfer of any units to an RRSP by an annuitant of the RRSP will constitute a disposition of capital property provided the units are held as capital property by the annuitant. Accordingly, subsection 100(1) of the Income Tax Act (the "Act") may apply to include the full amount of any capital gain from the disposition in the annuitant's income while paragraph 40(2)(g) of the Act will apply to deem any capital loss from the disposition to be nil.

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch